Thomson Reuters reported stronger-than-expected third-quarter revenue on Tuesday, as the company significantly increased its investment in generative AI.
EPS was reported at $0.80 versus $0.79 expected, while revenues came in at US$1.72 billion (A$2.59 billion) exceeding analyst forecasts of $1.71 billion.
The Toronto-based technology and content firm announced it will dedicate over $200 million to AI development in 2024, up from the more than $100 million invested this year.
CEO Steve Hasker stated, "We remain focused on driving innovation across our portfolio and markets to best serve our customers, demonstrated by our investment in AI now increasing to over $200 million in 2024."
The firm’s AI-powered tools, such as Westlaw AI and CoCounsel, are tailored for legal professionals, offering capabilities to draft documents, conduct research, and retrieve information from vast databases efficiently.
Thomson Reuters continues to enhance its AI portfolio through acquisitions, including the recent purchase of Safe Sign Technologies, a U.K.-based developer of large language models for legal use, and Materia, a specialist in agentic AI for tax and accounting.
These technologies are set to bolster its capabilities in automated, task-solving AI tailored for corporate and legal sectors.
Michael Eastwood, Chief Financial Officer, noted that generative AI now represents approximately 15% of Thomson Reuters' annual contract value of $6 billion. This contribution underscores the growing demand for AI-driven solutions across its client base.
Thomson Reuters also raised its full-year organic revenue growth forecast to around 7%, up from a previous estimate of 6.5%. Organic revenue is measured on a constant currency basis, excluding the effects of acquisitions and asset disposals.
Mr. Hasker added, “As we look ahead, we are committed to taking a balanced capital allocation approach, focusing on delivering sustained value creation through a long-term investment strategy.”
Revenue from its primary sectors - legal, corporate, and tax and accounting - each reported a 9% rise, while Reuters News saw a 10% increase, driven by acquisitions and AI licensing revenues.
In a strategic move, Thomson Reuters secured a licensing deal with Meta Platforms, owner of Facebook, allowing Meta to use Reuters content to power its AI chatbot's real-time responses to user questions.
The financial details of this partnership remain confidential, though it highlights the increasing value of AI-driven content and its licensing potential.
As of 8:20 am (AEDT), Wednesday, November 6, Thomson Reuters (TRI) stock was trading at $171.2, showing a significant increase of 3.8% from the previous close of $165.02. The stock reached a day low of $165.60 and a day high of $173.56. Thomson Reuters' market cap stands at $76.99 billion.